Conservatories: Sales are down but Companies remain Confident

The Eurocell Conservatory Roof Quarterly Trends Report appears in Conservatory Design & Build. As well as the quarterly trend survey, monthly trackers are published in intervening months in Glass Age.

Highlights this quarter:

• A balance of 2% of conservatory fabricators sold less in July to September 2005 compared with the previous three months.
• Year-on-year, a net 21% of fabricators reported a fall in sales in July to September 2005 compared with the same three months in 2004 (chart 1).
• Looking ahead, a net 1% of respondents expect sales to fall in October to December compared with the second quarter of 2005.
• Fabricators remain cautious in their year-on-year forecasts too with a net 4% predicting a drop in sales over the next three months compared with the same period last year (chart 2).
• The difference between the percentage of companies reporting an increase over those reporting a decrease is the net balance.

Prices

The average price of an installed conservatory in September increased 3% from £6,617 in June to £6,841(chart 3). Prices exclude VAT, dwarf walls and bases.

Average prices were higher in the Midlands (£7,271), than the South (£7,107) or North (£6,160).

Mid-sized firms achieved notably higher average prices for conservatories (£7,100) than small (£6,731) or large firms (£6,718).

Conservatory Styles

Edwardian/Georgian style conservatories accounted for 47% of the total installed in September - 28% were Victorian, and 20% Lean-to conservatories. A small proportion sold (5%) was in 'Other' styles.

Outlook

A net 11% of fabricators are more positive now about the overall prospects for the conservatory market compared with three months ago (chart 4). Large and mid-sized firms (20% and 17% respectively) are more confident than small companies (6%). Fabricators in the Midlands (19%) are more bullish than those in the South (12%) or North (3%).

Compared with 2004, the overall outlook for the conservatory market is mixed. Twenty eight percent of respondents expect sales to pick up but equally a further 28% forecast a drop. Therefore on balance little change is expected over the period. Mid-sized firms and fabricators in the Midlands are most positive.

Of those who anticipate better sales, 44% forecast an increase of up to 9% and the remaining 56% expect a rise of 10% or more. Most believe the rise will come as consumers continue to invest in extending their current homes against the option of moving.

However, those who predict poorer prospects blame the economy and lack of consumer confidence.

Problems

Lack of confidence in the market (63%), low sales volume (61%) and margin squeeze (59%) were the main problems facing conservatory fabricators in the last three months. However lack of sales leads was the single biggest problem, mentioned by 26% of respondents. But this was an improvement on last quarter's survey (40%).

Overview

‘No matter how well or badly the conservatory market is doing,’ says Mike Rigby, whose company Michael Rigby Associates produced this report, ‘the effects are magnified by how well the UK economy is doing. And increasingly, in this interconnected world, that depends on the health of the global economy.

‘Right now the world economy is a dynamic mix of the good and bad. The US, China and India are booming and at risk of overheating. Japan, the world's second biggest economy is returning to life. Eastern Europe is growing, but the old EU, Germany, France and Italy in particular are crawling along.

‘Now the UK seems to be following in its European neighbours' footsteps. Recent reports suggest the economy is on course for its weakest performance in 13 years, with rising oil and raw material prices blamed for a third quarter decline in industrial production. Weak consumer spending is also being linked to a large drop in domestic manufacturing orders.

‘However, the housing market has not crashed as the doomsayers predicted, and it may even recover some of its bounce, but any weakness here has big effects. When the housing market is bubbling, consumers have the confidence to borrow and spend to brighten up their lives and improve their homes. When the market is weak they borrow less and postpone non-essential projects. This year many projects were postponed as homeowners put their plans on ice. Now they see that the value of their home, a consumer's biggest financial asset, has not collapsed will they come back into the market?’